tv First Business KICU August 12, 2013 4:00am-4:31am PDT
bad banking behavior: the secret fees lurking in your checking account. in today's cover story, detroit's bankruptcy is hurting investor's miles from michigan. plus, why soda is becoming a harder sell. and, here's man's new best friend: why more chickens and roosters are moving away from the farm. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning! it's monday, august 12th. i'm angela miles. in today's first look: is the summer rally slipping away? the major indicies all fell friday, ending down for the entire week. it's the first weekly decline since june as traders fret over the fed's next move. gold was a gainer by
$4. oil added on $2.63 apple shines in its patent case. the internationl trade commission ruled that samsung infringed on iphone patents owned by apple. samsung is expected to appeal. and aol has turned into a chatter stock. shares rose 2% friday on speculation the internet company is planning drastic cuts or that it may shut down its local news sites, called patch. scott shellady of trean group joins us on this monday morning. happy monday morning to you, scott. - good morning. - how critical will the inflation numbers and retail earnings this week be to traders? - it's going to be very critical with the fed's dual mandate. we have to keep an eye on inflation. i don't think we've got inflation. i think we've got disinflation. bernanke mentioned that in his last
speech. something to watch going forward - we actually might be in a deflationary cycle, so, keep your eyes glued to the inflation numbers. - china plays were popular last week with people buying the metals because of some growth in china. what will be your play this week? what do you see happening here? - i tell you what, i think you should stay away from china. china leads us in manufacturing. only one thing - their economic numbers. really, them in manufacturing - everything else, just by a hair. so be careful about china. at the end of last quarter, three of their largest banks shut down their atms over the weekend. you couldn't take any money out. something's going on there. i'm not quite sure. - good to know about that. what about the low volume and low volatility in the market? what will that mean for trading? - let's just call that august. it happens every year. a lot of folks go on holiday in europe, but i also think that with september coming up, we've got the german elections september 22nd, so we're going to wait and see what happens with that as far as the eu goes. i think more bad news comes out of china. then, of course, we've got october sequester cuts, and obamacare in january. - what would you do with your money right now? - i think i'm still playing the 10-year. that's the truth serum. i would stay away from equities
- they're not really telling you very much. be careful about getting long bonds 275. we think that that's a good rate, and above 250 we want to get out. so 275 to 250 is the rate we're playing in bonds. - thank you, scott, and have a good trading week. - all right, you too. a ripple effect of detroit's bankruptcy is being felt in michigan communities far from the motor city, but as our cover story explains, they are not far enough for some creditors of municipal bonds who are nervous about getting repaid. county officials in flint, michigan, 60 miles from detroit, sought to raise $54 million for sewer and water improvements by selling municipal bonds. but investors demanded higher interest rates in the wake of detroit's bankruptcy. potential municipal bond investors issued the same demand in saginaw county, 100 miles northwest of detroit, and again in the city of battle creek, 120 miles to the west. in each case, municipal bond offerings had to be postponed and public works projects delayed. the reason, dale rosenthal says - they're all in michigan. "there's a big cost that's
unknown, and other cities asking for money will also be guaranteed by the state." "investors are skittish because the emergency manager has said he'll pay pennies on the dollar." funding delayed could itself have a ripple effect on public works projects and private- sector development. "this does discourage business and job creation, because you're competing with states with better infrastructures outside michigan." however, the $3.7 trillion u.s. municipal bond market overall does not seem to have slowed down - norwalk, connecticut, sold $21 million in general
obligation bonds august 1st, and across the country, other communities have raised a combined $8.6 billion. "it really comes down to what's going on in those communities, and do they have the ability to repay? if they do, then i see things moving forward." however, independent research firm municipal market advisors says investors are pulling money out of bond mutual funds, seeking better yields elsewhere. rising interest rates accompanying the federal reserve's tapering of its bond- buying program are other contributors to the trend. a landmark trial involving toyota continues today. the car company is facing a lawsuit by the family of a woman who was killed when her toyota camry unexpectedly accelerated to 100 miles per hour in 2009. the argument in this case is whether toyota is liable for a safety device it failed to install to stop the acceleration. the jury is being
asked to award the family $20 million. the jcpenney ceo saga continues. activist investor bill ackman wants the chairman of the jcpenney board, thomas engibous, to exit, but the chairman tells reporters ackman's actions are disruptive to the company's recovery. last thursday, ackman urged the board to quickly replace jcp's interim ceo, mike ullman. ackman is also saying the retailer is "flying blind." ackman manages the pershing square capital hedge fund, which owns nearly 18% of jc penney. jcp stock closed friday at its lowest price in a decade: $12.87. blackberry's board may be changing its tone about going private. reuters reports the wireless company is "warming up" to selling to a private buyer. the report sparked a more-than-7% rally in the stock. analysts warn it could be difficult to find a buyer for the troubled company. the launch of its blackberry 10 operating system didn't go as well as hoped. the company reportedly is
looking into other options, such as licensing blackberry 10 software or finding a partner. president obama is vacationing this week in martha's vinyard, but before taking off friday, he held a news conference and talked a bit about the process of finding the next federal reserve chairman. mr. obama says he has a range of outstanding candidates, and confirmed that janet yellen and larry summers are both in the mix. "a critical part of the job is making sure we keep inflation in check, that monetary policy is sound, that the dollar is sound. those are all critical components of the job." the news conference followed a closed-door meeting on goverment surveillence. ceos from apple and at&t were among those who attended. the president is opening an investigation into nsa surveillance programs. the former jp morgan trader known as the "london whale" may be off the hook. reports say bruno iksil is not likely to face charges related to bad trading bets that racked up more than $6 billion in losses for jp morgan chase. iksil is
called the london whale because he was based in jp morgan's london office and put on monster-sized trading positions. the justice deparmtment and sec are still investigating the bank, but the whale trader is said to no longer be the focus. things are looking up in the u.s. according to bruce flatt. he's the ceo of brookfield asset management and is often refered to as the warren buffett of canada. brookfield already has $100 billion in u.s. assets, and flatt tells cnbc there continues to be a lot of investment opportunity in america. flatt says he's bullish on the u.s. because housing, retail and manufacturing are all making a comeback, and he sees possibilities in the shale gas revolution. flatt also mentioned he's looking for value plays in europe and emerging markets. it's always fascinating to know how billionaires are investing *their money. insider monkey reveals warren buffett and others are buying shares of davita. the company owns kidney dialysis centers. billionairs are also bullish on sirius satellite radio company
verisign. another popular stock with 1-percenters is an internet registry services company. and billionairs are also big on credit card stock visa. investors are keeping their eyes on priceline. the stock is closing in on a milestone: $1,000 a share. in its latest earnings, priceline notes "tremendous momentum" going forward. strength in europe helped revenues. noodles and company, which went public earlier this summer, is trading lower after its first set of earnings failed to increase investor appetities. the company said it expects growth of about 3% - that's less than investors had anticipated. white wave foods beat wall street expectations. the company stands by its full-year forecast. soda sales are slipping. sales numbers at beverage giants coca-cola, pepsi and dr. pepper-snapple all dropped in the second quarter. beverage digest reports americans have been drinking less soda since 1998, while bottled water, tea and sports drinks are on the rise. branding specialist david johnson says soda could go the
way of cigarettes. "we're seeing this decline in the beverage industry like we saw a decline in smoking, a decline even in alcohol use, especially with cities going after it, with so many people talking about anti-obesity laws, anti-obesity measures." pepsi and coke did not return our request for comment. beverage companies are not alone with a sales setback. producers of sheet aluminum used for pop cans reportedly are doing more business overseas in search of better profits. back-to-school spending is off to a slow start. revenue at stores open at least a year rose 3.8% in july, the slowest pace since march, according to a study by the international council of shopping centers. in june, sales were up 5.5%. consumers are shopping for summer bargains instead of picking up new fall clothing. still to come, "coop" d'etat -
suffwith a deadly disease. i was one of them. my disease was obesity and after consulting with my doctor, i received the effective treatment i needed. please join the obesity action coalition to acknowledge obesity as a disease visit obesity action dot org to sign an open letter pledging your support and for more information about how to talk to your doctor about weight loss and treatment options. together we can make a choice to end obesity now. a public service from the obesity action coalition.
no-interest credit cards are making a comeback. bankrate.com reports that 4 out of 10 cards offer some period of zero interest. the tactic disappeared during the recession, but has made its way back as card companies face increased competition. "even as interest rates went up during the great recession, we didn't see the 0% rates popping up right away, and the reason is card issuers were very skittish about taking risks, particularly with the economic slump we were in." greg mcbride of bankrate.com tells us 0% rates are only trickling back in, and are mostly targeted toward certain customers. banks are attaching hidden fees to checking accounts and more. it's all uncovered in a new study by card hub. odysseas papadimitriou, founder of cardhub.com, is skyping with us this morning. glad to have you on the show. - thank you so much for having me. - you found that the average checking account has dozens of secret fees. how do the banks
rank? - we were shocked to find out that the average checking account has 30 fees, and on top of that sometimes do a great job in disclosing those fees and making them really accessible to consumers, like capital one and fifth third bank, and sometimes, at the bottom of our list, like hunt international bank and m&t bank, do a horrible job in terms of making their disclosures obvious to consumers and easy to digest. - what else surprised you about the study? - one of the things that surprised us was that the largest banks, which you would expect to be more secretive, if you will, are the most transparent. i think that's an outcome of the great recession, where the largest banks got the most scrutiny, and therefore became much more sensitive in terms of bringing out information and being transparent with their customers, whereas the smallest
banks are still trying to, if you will, trick consumers into thinking that there are not that many fees and into signing up for their products, when in fact there are a lot of fees that they are not telling consumers up front about. - what are ways to get around these fees? - some of these fees you can get around. like a maintenance fee - at most banks, with a minimum balance or direct deposit you can get around them. but some other fees, like a wire transfer or a cashier's check or when you use your atm card if you travel overseas, those fees are very hard to get around. - realistically, can anything be done? - i hope so. we were shocked to find out that the disclosure and the regulatory landscape around checking accounts and banking products is decades behind where credit cards are. we take for granted having a unified type of disclosure on credit cards, but when it comes to checking accounts, it is completely up to each bank to disclose what they are going to disclose, when they are going to disclose, and in what format
they are going to disclose. it's the wild west right now. - thank you for bringing us your study. - thank you so much for having me. coming up, why americans are chickening out on a money-saving venture. and, shopping for stocks? the department store that is already attracting attention in the options market ahead of earnings comes up later in chart talk.
has the perks of plentiful, fresh eggs and maybe some pet companionship, many city- dwellers are quickly discovering they are unable to afford, care for, and handle the barnyard birds' messy nature. as a result, unwanted roosters and hens are being dumped at the nation's shelters and animal sanctuaries at an alarming rate. "there is such an overflow of roosters all over the country" alexandra caswell says the farm sanctuary north of los angeles is at capacity with roosters, and the organizations' three locations across the country saw over 400 chickens last year, more than they have ever received. part of the problem is when ordering chickens for personal use, most suppliers, such as mypetchicken.com, ship them through the u.s. mail, arriving alongside your cable bill and birthday cards. the hens come "artificially bred" - food industry speak for "ready to lay eggs." this causes reproductive problems for the
young chicks that prevent them from producing eggs after age two, leaving many people at a loss for what to do when the eggs stop coming. - caswell says that when mail- order chickens arrive at your door step, roosters are thrown into the mix as fillers, and because only the female chickens can lay eggs, people have no use for them. "a lot of sites in los angeles are being approved for hens, but not roosters, so those roosters, they can't keep them, and they're being dumped at shelters or released out into the city." and this problem can only get worse as the trend continues to grow. backyardchickens.com is a website exclusively dedicated to the community of chicken- owners. the site opened in 2007 with just 50 members and has grown to more than 200,000. owner rob ludlow said in an email that there are many good reasons to own chickens, including self-sufficency and sustainable food grown humanely, and he believes that the trend has significant staying power. "a lof of people are trying to
avoid antibiotics, they're trying to not give money to factory farms - but again, they're affecting roosters by doing this." cities nationwide have adopted ordinances that allow for small flocks of hens, and caswell believes people will continue to raise their own chickens, but she wants to encourage proper training and adopting before buying. "we recommend adopting chickens and roosters rather than ordering them through the mail. that way they are getting adult animals rather than babies, and know the sex of the animals." reporting in los angeles for first business news, i'm ky sisson. information about adopting chickens and rescued farm animals is available at farmsanctuary.org. still ahead, this is huge week for earnings coming from retailers. a preview of stocks to watch in the shopping sector is coming your way next.
in chart talk this morning, a number of retailers report earnings this week. andrew keene, president of keeneonthemarket.com, is with us now. he's watching the charts. let's start with macy's. what do you see happening here, ahead of earnings and post- earnings? - if we look at macy's, the chart doesn't look that great. it seems stuck in this range between $46 and $50. but on friday, there was a big customer buyer of unusual option activity. a trader bought the macy's september $49 calls. they paid about $1.45 for these
calls. so someone thinks that macy's can get maybe to 52-week highs, breaking that $50 level. i bought these calls as well. the stock did pop a little bit. i think macy's can push through this $49, maybe possibly through $50, on earnings. - what will you specifically, as a trader, be listening to when these earnings come down? - as i looked at macy's, their valuation's a little bit high compared to dillard's, dds, but it's also cheap compared to sax. the thing i like about macy's - no european exposure, no exposure in china. they are u.s.-based. u.s. companies have been very, very strong this year. we look at global growth. the u.s. is where i want to be invested in, in companies that don't have that european exposure. - footlocker is another big one. what do you see here? - i guess is they kind of a paris trade, because i'm long calls in macy's and then i'm long puts in footlocker. on wednesday and thursday we saw a slew of put activity - august $35s, august $36s, september $35 puts. footlocker sold off
really hard, got to that 200-day moving average around $34, came back a little bit, got to $34.70. unlike macy's, footlocker has huge european exposure. i think they have a lot more competition. they're in europe. they're in canada. they're in asia. they're in china. so they have more exposure than macy's does. so it's kind of a little bit of a paris trade here. i am long september $50 puts. i think if macy's breaks that 200-day moving average at $49, it can move down to about $47. - thank you, andrew. - thank you. coming up on the show tomorrow, the vacation home rental business is hot this summer. the vp of home-away will be here with late-summer deals. don't miss it. before we go, we want to take a minute and recognize someone on the staff. "first- business- starts- now- exclamation- point- new- line." john kostka has been captioning our program for the last few years - a mysterious process that makes it possible for the hearing-impaired to enjoy our show. john is going back to school in a graduate program at ucla. we will miss him, his attention to detail, and his good grammar. best wishes, john! * (and best wishes to you too!) * and from all of us first business, thank you for watching!
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